HMRC consults on major expansion to the Uncertain Tax Treatment regime

Currently, the UTT regime applies to bodies corporate and partnerships that (by themselves or with other group companies) have either an annual turnover above £200 million or a balance sheet total of over £2 billion. For UK resident taxpayers these thresholds apply to the total turnover or balance sheet; for non-UK residents they apply to so much as is attributable to UK activities.

The consultation proposes expanding the regime to include both individuals and trusts.

In practice, the extended rules would likely capture only wealthy individuals and high value trusts, as notification is required only where the potential tax advantage exceeds £5 million.  However, it is worth noting that the Government proposes to bring all individuals and trusts into scope, rather than specifically defining “wealthy” or “high value”.

The current regime applies to:

• Corporation Tax (including amounts charged as though they were Corporation Tax, such as the supplementary charge on ringfenced oil and gas profits, and the charge on close company loans to participators).  Corporation Tax will also include the charge on Unassessed Transfer Pricing Profits, which replaces Diverted Profits Tax for periods beginning on or after 1 January 2026;
• VAT; and
• (where relevant to PAYE and partnership returns) Income Tax.

The consultation proposes extending the regime to include:

• Stamp Duty Land Tax (SDLT) for both residential and non-residential properties.  As land taxes are devolved to Scotland and Wales, the UTT requirement would apply only to land transactions in England and Northern Ireland
• National Insurance Contributions (NICs). Although NICs are taken into account when valuing a potential Income Tax uncertainty, uncertainties relating to NICs are not currently reportable in their own right.  The proposals would mean all classes of NICs are potentially reportable, although the Government expects that the £5 million threshold would usually only be exceeded for Primary and Secondary Class 1 NICs;
• withholdings of tax and NICs made under the Construction Industry Scheme (CIS);
• Capital Gains Tax (CGT).  The consultation indicates that the Government has identified CGT as an area of particular concern; and
• Inheritance Tax (IHT), potentially requiring notification during the planning stage rather than at the tax point (on death). Although the Government indicates a potential tax gap of £0.3 billion in relation to IHT, it acknowledges that only a limited number of cases are likely to exceed the £5 million threshold.

Perhaps the most significant (and, for those who recall the prior consultations in 2020 and 2021, the most disappointing) proposal is to require notification where HMRC’s position is not known and there is more than one credible interpretation of the law. This is modelled on the new Guidelines for Compliance CfC13 published last year and is ostensibly targeting novel products or processes not yet addressed in HMRC guidance. The consultation document does not detail how “credible” would be defined for these purposes; as well as capturing speculative filing positions, this could require notification where taxpayers adopt a good faith interpretation of the law. 

A similar trigger was proposed during the initial development of the UTT regime but was ultimately removed because it was too subjective.  The consultation document justifies the breadth of the reformulated trigger as necessary to avoid this subjectivity, but nonetheless acknowledges that it may be too wide.

The Government proposes excluding transfer pricing calculations from this trigger, and seeks input on other uncertainties that should be excluded.

The current regime provides a general exemption where it is reasonable to conclude that all, or substantially all, of the information relating to the uncertainty is already available to HMRC.  This can be achieved through informal discussions as well as statutory disclosures, but HMRC expects taxpayers to highlight relevant amounts proactively.

Where taxpayers discuss uncertainties with HMRC, HMRC will generally confirm when (in its view) the general exemption applies. The consultation proposes putting this on a statutory footing, making written confirmation from HMRC a condition for claiming the exemption. There is no suggestion that this would involve a formal application process, but it would prioritise HMRC’s view of the discussion over the taxpayer’s.

The consultation document does not specify whether additional notifications would be required if later developments impact the nature or amount of the uncertainty. 

On a positive note, the consultation proposes moving to a single annual UTT notification date for all in-scope taxes.  This would sit alongside the existing filing requirements for each tax.

If implemented, the Government expects to legislate in the next available Finance Bill, meaning any changes could apply to returns filed as early as 1 April 2028.

The proposals are currently at the consultation stage, and may not become law. However, there is clear momentum towards earlier and broader data collection by HMRC; since the Government considers there to be no material compliance burden associated with UTT, an extension of the regime seems likely.

HMRC invites views from businesses, advisers, and representative bodies on the scope of the proposed changes, the likely impact on compliance costs, and how to ensure the regime is targeted and effective. The consultation closes on 4 June 2026.

Addleshaw Goddard will be preparing a response to the consultation, as well as contributing to submissions by representative bodies as appropriate.  If you would like us to reflect your views in our response, please contact us.